SOLARA DIGITAL INFRASTRUCTURE GP LLC 1200 Market Street, Suite 3400 Wilmington, DE 19801
Telephone: (302) 555-7800 Facsimile: (302) 555-7801
____, 2025
To the Limited Partners of:
Solara Digital Partners Fund IV LP Solara Digital Partners Fund IV-A (Cayman) LP Solara Digital Partners Fund IV-B (Luxembourg) SCSp Solara Digital Partners Fund V LP Solara Digital Partners Fund V-A (Cayman) LP Solara Digital Partners Fund V-B (Luxembourg) SCSp
Dear Limited Partners:
I. INTRODUCTION AND PURPOSE
Solara Digital Infrastructure GP LLC (the "General Partner"), in its capacity as general partner of Solara Digital Partners Fund IV LP ("Fund IV LP") and Solara Digital Partners Fund V LP ("Fund V LP"), and acting through its affiliated entities Solara Offshore GP Ltd. ("Offshore GP"), as general partner of Solara Digital Partners Fund IV-A (Cayman) LP ("Fund IV-A Cayman") and Solara Digital Partners Fund V-A (Cayman) LP ("Fund V-A Cayman"), and Solara Luxembourg Management S.à r.l. ("Luxembourg GP"), as general partner (gérant commandité) of Solara Digital Partners Fund IV-B (Luxembourg) SCSp ("Fund IV-B Lux") and Solara Digital Partners Fund V-B (Luxembourg) SCSp ("Fund V-B Lux," and together with Fund IV LP, Fund IV-A Cayman, Fund IV-B Lux, Fund V LP, and Fund V-A Cayman, the "Funds"), is writing to formally solicit the consent of the limited partners of each of the Funds (collectively, the "Limited Partners" or "LPs") with respect to the proposed cross-border fund-platform reorganization described in detail herein (the "Reorganization").
This consent solicitation is being made pursuant to the amendment and consent provisions of each Fund's Amended and Restated Agreement of Limited Partnership (or, in the case of the Luxembourg SCSp vehicles, the equivalent governing partnership agreement) (each, an "LPA" and collectively, the "LPAs"). This letter constitutes the formal consent solicitation under the applicable LPA provisions and supersedes any and all prior informal discussions, correspondence, presentations, or other communications regarding the Reorganization, whether written or oral.
As the Limited Partners are aware, the LP Advisory Committee of the Funds (the "LPAC") was briefed on the proposed Reorganization at its regularly scheduled meeting on April 22, 2025, at which time preliminary consent of approximately seventy-eight percent (78%) in interest was obtained from the LPAC members present. Following that briefing and the receipt of extensive feedback from the LPAC and certain large institutional LPs, the General Partner has refined the structure and terms of the Reorganization as described in this letter.
LP consent is being requested from all Limited Partners across all six Fund vehicles. Each Limited Partner is requested to review this letter carefully, together with the enclosures described in Section XIV below, and to execute and return the enclosed Form of LP Consent in accordance with the instructions set forth in Section XIII.
In connection with the Reorganization, Solara has engaged Calderwood & Harkness LLP ("Calderwood & Harkness") as its U.S. tax counsel to advise on all aspects of the transaction structure and the related private letter ruling request to the Internal Revenue Service. In addition, the LPAC has retained independent counsel, Whitfield, Carruthers & Doyle LLP ("WCD"), led by Diana Carruthers, Partner, to review the Reorganization on behalf of Limited Partners. LPs are encouraged to contact Ms. Carruthers directly with any questions or concerns, as described further in Sections IX and XV below.
II. BACKGROUND — EXISTING FUND STRUCTURE
A. Solara Platform Overview
Solara Digital Infrastructure LP is a Delaware limited partnership founded on March 17, 2014, and headquartered at 1200 Market Street, Suite 3400, Wilmington, Delaware 19801. Solara is a private equity sponsor with approximately $14.7 billion in assets under management as of March 31, 2025, focused on digital infrastructure—including data centers, fiber-optic networks, and edge computing facilities—and enterprise software-as-a-service ("SaaS") verticals. The firm was founded by, and continues to be led by, Viktor Raines, Managing Partner.
B. Current Fund Architecture
The current Solara fund platform operates through six parallel fund vehicles organized across three jurisdictions—Delaware, the Cayman Islands, and the Grand Duchy of Luxembourg—as described below.
Fund IV (Vintage 2021)
Solara Digital Partners Fund IV LP — Organized as a Delaware limited partnership; aggregate committed capital of approximately $4.2 billion; approximately 72% deployed as of the date hereof; Employer Identification Number 85-2103748; general partner: Solara Digital Infrastructure GP LLC.
Solara Digital Partners Fund IV-A (Cayman) LP — Organized as a Cayman Islands exempted limited partnership; aggregate committed capital of approximately $1.85 billion; established as a parallel fund primarily for non-U.S. investors and U.S. tax-exempt investors; registered office: Harborstone Corporate Services Ltd., P.O. Box 2714, 94 Solaris Avenue, George Town, Grand Cayman KY1-1111, Cayman Islands; general partner: Solara Offshore GP Ltd.
Solara Digital Partners Fund IV-B (Luxembourg) SCSp — Organized as a Luxembourg société en commandite spéciale (special limited partnership); aggregate committed capital of approximately €1.15 billion (approximately $1.24 billion based on an exchange rate of EUR/USD 1.08); registered office: 14, rue Jean-Pierre Brasseur, L-1258 Luxembourg, Grand Duchy of Luxembourg; general partner (gérant commandité): Solara Luxembourg Management S.à r.l.
Fund V (Vintage 2023)
Solara Digital Partners Fund V LP — Organized as a Delaware limited partnership; aggregate committed capital of approximately $5.6 billion; approximately 38% deployed as of the date hereof; Employer Identification Number 88-3467219; general partner: Solara Digital Infrastructure GP LLC.
Solara Digital Partners Fund V-A (Cayman) LP — Organized as a Cayman Islands exempted limited partnership; aggregate committed capital of approximately $2.45 billion; registered office: Harborstone Corporate Services Ltd., George Town, Grand Cayman, Cayman Islands; general partner: Solara Offshore GP Ltd.
Solara Digital Partners Fund V-B (Luxembourg) SCSp — Organized as a Luxembourg société en commandite spéciale; aggregate committed capital of approximately €1.38 billion (approximately $1.49 billion based on an exchange rate of EUR/USD 1.08); registered office: 14, rue Jean-Pierre Brasseur, L-1258 Luxembourg; general partner (gérant commandité): Solara Luxembourg Management S.à r.l.
C. Investor Base and Rationale for Parallel Structure
The parallel fund structure was historically established to accommodate the different regulatory, tax, and investment requirements of the Funds' diverse investor base:
U.S. Taxable Investors. U.S. taxable investors—including family offices, high-net-worth individuals, and certain U.S. corporate investors—invest through the Delaware main funds (Fund IV LP and Fund V LP), which are treated as domestic partnerships for U.S. federal income tax purposes.
U.S. Tax-Exempt Investors. U.S. tax-exempt investors—including state pension funds, university endowments, and charitable foundations—invest through the Cayman Islands parallel vehicles (Fund IV-A Cayman and Fund V-A Cayman) in order to access unrelated business taxable income ("UBTI") blocker benefits through offshore corporate subsidiary holding structures interposed between the Cayman parallel vehicles and certain underlying portfolio company investments.
Non-U.S. Investors. Non-U.S. investors—including sovereign wealth funds, foreign pension funds, and international insurance companies—invest through either the Cayman Islands or Luxembourg parallel vehicles, depending on the availability of favorable tax treaty access, local regulatory considerations, and the investor's specific structuring preferences.
D. Portfolio Company Overview
As of the date hereof, the Funds hold interests in a total of twenty-three (23) portfolio companies across all six fund vehicles, consisting of eleven (11) portfolio companies held by the Fund IV vehicles and twelve (12) portfolio companies held by the Fund V vehicles. A summary of the representative portfolio companies being transferred in the Reorganization is set forth in Section V below.
III. BUSINESS RATIONALE FOR THE REORGANIZATION
The Reorganization is being undertaken for the following compelling business reasons, each of which the General Partner believes will inure to the benefit of all Limited Partners:
(a) Operational Cost Reduction. The Solara fund platform currently incurs approximately $3.8 million annually in duplicative offshore administration, audit, regulatory filing, and compliance fees across the four offshore parallel vehicles. These costs include separate audit fees for each Cayman and Luxembourg vehicle, separate fund administration fees, separate regulatory filing obligations, and separate legal costs associated with maintaining registered offices and corporate governance across multiple jurisdictions. The Reorganization will substantially reduce these costs by consolidating the four offshore vehicles into a single master fund structure, with only two streamlined feeder vehicles maintained in the Cayman Islands. The General Partner estimates that the post-Reorganization ongoing annual costs for the consolidated platform will be approximately $1.4 million, representing an annual savings of approximately $2.4 million—a reduction of approximately 63%—which will benefit all Limited Partners on a pro rata basis.
(b) OECD Pillar Two GloBE Compliance. The Organisation for Economic Co-operation and Development ("OECD") Pillar Two Global Anti-Base Erosion ("GloBE") rules, as implemented by the European Union's Council Directive (EU) 2022/2523 and transposed into Luxembourg law, are effective for Solara's Luxembourg entities beginning with fiscal year 2025. These rules impose a minimum effective tax rate of 15% on large multinational enterprise groups and, in the General Partner's assessment (based on the advice of Calderwood & Harkness and Veldhuis & Gérard S.à r.l., Luxembourg counsel), significantly diminish the structural benefits that the Luxembourg SCSp vehicles were originally designed to provide to investors. The Reorganization proactively addresses these regulatory changes by consolidating the Luxembourg vehicles into the Delaware-based master fund structure before the GloBE rules create material additional compliance burdens and costs.
(c) FATCA/CRS Simplification. The consolidated structure will materially simplify the Funds' compliance obligations under the Foreign Account Tax Compliance Act ("FATCA") (Sections 1471–1474 of the Internal Revenue Code of 1986, as amended (the "Code")) and the OECD's Common Reporting Standard ("CRS"). Under the current multi-jurisdictional parallel structure, each offshore vehicle maintains separate FATCA and CRS reporting obligations in its jurisdiction of organization, resulting in duplicative due diligence, reporting, and compliance costs. The consolidated structure will centralize these obligations and reduce the overall compliance burden.
(d) Governance Simplification. Over the course of the past two years, multiple Limited Partners have requested a streamlined governance structure for the Solara fund platform. The current six-vehicle architecture requires coordination of capital calls, distributions, and investor communications across multiple vehicles and jurisdictions, resulting in complexity that is disproportionate to the benefits provided by the parallel structure. The Reorganization will reduce the number of active fund vehicles, simplify investor reporting, streamline capital call coordination and distribution mechanics, and provide a clearer governance framework for the consolidated platform.
The board of directors of Solara Digital Infrastructure GP LLC approved the exploration and development of the platform reorganization at a duly convened meeting held on March 14, 2025, following an extensive review process that included consultations with Calderwood & Harkness, Whitfield, Carruthers & Doyle, and the LPAC.
IV. DESCRIPTION OF THE PROPOSED REORGANIZATION
A. Overview
The Reorganization involves the domestication and merger of the four offshore fund vehicles—Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux (collectively, the "Legacy Offshore Vehicles")—into a newly established Delaware-domiciled master fund structure through a series of contribution, dissolution, and migration transactions described in detail below.
Importantly, the two U.S. Delaware main funds—Fund IV LP and Fund V LP—are not being contributed into the master fund structure. Fund IV LP and Fund V LP will continue to hold their existing portfolio company investments directly and will co-invest alongside the Consolidated Master Fund (as defined below) on a going-forward basis in accordance with the existing co-investment arrangements set forth in the LPAs.
The target effective date for completion of all steps of the Reorganization is December 1, 2025, subject to receipt of a favorable private letter ruling from the Internal Revenue Service and completion of all required LP and third-party consents as described herein.
B. Newly Formed Entities
The Reorganization contemplates the formation of the following new entities:
Solara Consolidated Master Fund GP LLC — A Delaware limited liability company to be organized under the Delaware Limited Liability Company Act; will serve as the general partner of Solara Consolidated Master Fund LP. Solara Consolidated Master Fund GP LLC will be wholly owned, directly or indirectly, by Solara Digital Infrastructure GP LLC.
Solara Consolidated Master Fund LP (the "Consolidated Master Fund" or "Master Fund") — A Delaware limited partnership to be organized under the Delaware Revised Uniform Limited Partnership Act; will serve as the master fund vehicle consolidating all portfolio assets currently held by the four Legacy Offshore Vehicles.
Solara International Feeder (Cayman) LP (the "International Feeder") — A Cayman Islands exempted limited partnership to be registered under the Cayman Islands Exempted Limited Partnership Act (As Revised); will serve as the feeder vehicle through which non-U.S. investors will invest into the Consolidated Master Fund.
Solara Tax-Exempt Feeder (Cayman) LP (the "Tax-Exempt Feeder") — A Cayman Islands exempted limited partnership to be registered under the Cayman Islands Exempted Limited Partnership Act (As Revised); will serve as the feeder vehicle through which U.S. tax-exempt investors (including pension funds, endowments, and other tax-exempt entities) will invest into the Consolidated Master Fund in a manner designed to mitigate UBTI concerns.
All newly formed entities will elect partnership classification for U.S. federal income tax purposes by filing IRS Form 8832 (Entity Classification Election) with the Internal Revenue Service pursuant to Treasury Regulations § 301.7701-3. The effective date of each check-the-box election will be the date of formation of the respective entity.
C. Five-Step Transaction
The Reorganization will be effected through a five-step transaction sequence, as described below. Each step is contingent upon the successful completion of the preceding step and satisfaction of all applicable conditions precedent.
Step 1 — Formation of New Entities (Target: September 15, 2025)
Step 1 involves the formation of Solara Consolidated Master Fund GP LLC and Solara Consolidated Master Fund LP in the State of Delaware, and the registration of Solara International Feeder (Cayman) LP and Solara Tax-Exempt Feeder (Cayman) LP in the Cayman Islands. Certificates of formation and limited partnership agreements (or exempted limited partnership agreements, as applicable) will be filed and executed for each entity. Simultaneously, IRS Form 8832 check-the-box elections will be filed for each newly formed entity to confirm partnership classification for U.S. federal income tax purposes.
Step 2 — Contribution of Fund IV-A Cayman Assets (Target: October 1, 2025)
Fund IV-A (Cayman) LP will contribute all of its portfolio assets—consisting of equity interests in the portfolio companies held by such vehicle—to Solara Consolidated Master Fund LP in exchange for a limited partnership interest in the Master Fund. The key financial parameters of this contribution are as follows:
Aggregate fair market value of contributed assets: approximately $2.31 billion
Aggregate adjusted tax basis of contributed assets: approximately $1.62 billion
Aggregate built-in gain: approximately $690 million
This contribution is intended to qualify as a tax-free contribution under Section 721(a) of the Code, with the contributed assets receiving a carryover basis under Section 723 of the Code and the holding periods of the contributed assets tacking under Section 1223(2) of the Code.
Step 3 — Contribution of Fund IV-B Luxembourg Assets (Target: October 15, 2025)
Fund IV-B (Luxembourg) SCSp will contribute all of its portfolio assets to Solara Consolidated Master Fund LP in exchange for a limited partnership interest in the Master Fund. The key financial parameters of this contribution are as follows:
Aggregate fair market value of contributed assets: approximately €1.07 billion (approximately $1.16 billion based on an exchange rate of EUR/USD 1.08)
Aggregate adjusted tax basis of contributed assets: approximately €782 million (approximately $844.6 million)
Aggregate built-in gain: approximately €288 million (approximately $311 million)
This contribution is also intended to qualify as a tax-free contribution under Section 721(a) of the Code, with carryover basis and tacking holding periods as described above.
Step 4 — Contribution of Fund V Offshore Assets (Target: November 1, 2025)
The Fund V offshore vehicles will each contribute all of their respective portfolio assets to Solara Consolidated Master Fund LP in exchange for limited partnership interests in the Master Fund, as follows:
Fund V-A (Cayman) LP:
Aggregate fair market value of contributed assets: approximately $2.89 billion
Aggregate adjusted tax basis of contributed assets: approximately $2.34 billion
Aggregate built-in gain: approximately $550 million
Fund V-B (Luxembourg) SCSp:
Aggregate fair market value of contributed assets: approximately €1.29 billion (approximately $1.39 billion based on an exchange rate of EUR/USD 1.08)
Aggregate adjusted tax basis of contributed assets: approximately €1.14 billion (approximately $1.23 billion)
Aggregate built-in gain: approximately €150 million (approximately $162 million)
The same tax-free contribution treatment under Section 721(a) of the Code is intended for each of these contributions, with carryover basis under Section 723 and tacking holding periods under Section 1223(2).
Step 5 — Dissolution of Legacy Offshore Vehicles and LP Migration (Target: December 1, 2025)
Upon completion of Steps 2 through 4, each of the Legacy Offshore Vehicles—Fund IV-A (Cayman) LP, Fund IV-B (Luxembourg) SCSp, Fund V-A (Cayman) LP, and Fund V-B (Luxembourg) SCSp—will dissolve in accordance with the dissolution provisions of their respective governing documents and applicable law. In connection with such dissolution, each Legacy Offshore Vehicle will distribute its respective limited partnership interest in the Consolidated Master Fund LP to its existing Limited Partners in accordance with the LPs' proportionate interests.
Following receipt of such distributions, Limited Partners will migrate into the appropriate feeder vehicle based on their investor category:
Non-U.S. Limited Partners will subscribe for interests in Solara International Feeder (Cayman) LP, which will hold the corresponding Master Fund interests on their behalf.
U.S. Tax-Exempt Limited Partners will subscribe for interests in Solara Tax-Exempt Feeder (Cayman) LP, which will hold the corresponding Master Fund interests on their behalf.
The distributions by the Legacy Offshore Vehicles are intended to qualify as tax-free distributions under Section 731(a) of the Code, as discussed further in Section VI below.
D. Aggregate Financial Summary
The following table summarizes the aggregate financial parameters of the Reorganization:
E. Post-Reorganization Structure
Following completion of the Reorganization, the Solara fund platform will operate through the following streamlined structure:
The two Cayman feeder vehicles—the International Feeder and the Tax-Exempt Feeder—will invest into the Consolidated Master Fund LP as limited partners. Each feeder vehicle will provide the appropriate structuring benefits for its respective investor class.
U.S. taxable investors will remain directly invested in Fund IV LP and Fund V LP, which are not being restructured. Fund IV LP and Fund V LP will continue to hold their existing portfolio company investments directly and will co-invest alongside the Consolidated Master Fund on a parallel basis.
All four Legacy Offshore Vehicles (Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and Fund V-B Lux) will be dissolved and deregistered in their respective jurisdictions of organization. The Cayman vehicles will be deregistered with the Cayman Islands Monetary Authority ("CIMA"), and the Luxembourg vehicles will be liquidated and struck off the Luxembourg Trade and Companies Register (Registre de Commerce et des Sociétés).
Pre-Reorganization and Post-Reorganization organizational charts are enclosed with this letter for the Limited Partners' reference.
V. REPRESENTATIVE PORTFOLIO COMPANIES BEING TRANSFERRED
The following is a summary of certain representative portfolio company interests that will be contributed to the Consolidated Master Fund LP in connection with the Reorganization. This summary is provided for illustrative purposes and does not constitute a complete listing of all portfolio company interests being transferred.
NovaBright Data Systems Inc. — A Delaware corporation engaged in the ownership and operation of hyperscale data centers across the United States. NovaBright currently operates seven facilities comprising approximately 420 megawatts of total capacity across Virginia, Texas, and Oregon. Fair market value: approximately $890 million. Adjusted tax basis: approximately $520 million. Built-in gain: approximately $370 million. The interest in NovaBright is held 60% by Fund IV-A Cayman and 40% by Fund IV LP. Only the 60% interest held by Fund IV-A Cayman will be transferred to the Consolidated Master Fund; the 40% interest held by Fund IV LP will remain with Fund IV LP.
Crestline Cloud Solutions LLC — A Delaware limited liability company treated as a disregarded entity for U.S. federal income tax purposes, operating a cloud-native SaaS platform for enterprise resource planning in the healthcare and financial services sectors. Fair market value: approximately €340 million (approximately $367 million). Adjusted tax basis: approximately €195 million (approximately $211 million). Built-in gain: approximately $156 million. The interest in Crestline is held 100% by Fund IV-B Lux and will be transferred in its entirety to the Consolidated Master Fund.
Veridian Edge Computing Corp. — A Delaware corporation engaged in the development, deployment, and operation of edge computing infrastructure, including micro data centers and network points of presence, serving telecommunications and content delivery customers. Fair market value: approximately $1.12 billion. Adjusted tax basis: approximately $780 million. Built-in gain: approximately $340 million. The interest in Veridian is held 55% by Fund V-A Cayman and 45% by Fund V LP. Only the 55% interest held by Fund V-A Cayman will be transferred to the Consolidated Master Fund; the 45% interest held by Fund V LP will remain with Fund V LP.
Thorngate Fiber Networks LP — A Delaware limited partnership engaged in the ownership and operation of long-haul and metropolitan fiber-optic networks, with approximately 38,000 route miles of fiber across the eastern and central United States. Fair market value: approximately $670 million. Adjusted tax basis: approximately $490 million. Built-in gain: approximately $180 million. The interest in Thorngate is held 100% by Fund IV-A Cayman and will be transferred in its entirety to the Consolidated Master Fund.
Helix SaaS Holdings Ltd. — A Cayman Islands exempted company serving as a holding company for a portfolio of enterprise SaaS businesses focused on cybersecurity, identity management, and data analytics. Fair market value: approximately $445 million. Adjusted tax basis: approximately $310 million. Built-in gain: approximately $135 million. The interest in Helix is held 100% by Fund V-A Cayman and will be transferred in its entirety to the Consolidated Master Fund.
In addition to the foregoing, eighteen (18) additional portfolio companies across the Fund IV and Fund V vehicles will be transferred to the Consolidated Master Fund in connection with the Reorganization. A complete listing of all portfolio companies and their associated financial parameters is available upon request from Priya Narasimhan, General Counsel, at the address set forth in Section XV.
VI. SUMMARY OF ANTICIPATED TAX TREATMENT
The following is a summary of the anticipated U.S. federal income tax treatment of the Reorganization, based on the advice of Calderwood & Harkness LLP and subject to the important disclaimer set forth in Section VI.I below.
A. Nonrecognition on Contributions (IRC § 721(a))
The contributions of portfolio assets by the Legacy Offshore Vehicles to the Consolidated Master Fund LP in Steps 2 through 4 of the transaction are intended to qualify as tax-free contributions to a partnership under Section 721(a) of the Code. Under Section 721(a), no gain or loss is recognized by a partnership or any of its partners upon the contribution of property to the partnership in exchange for an interest in the partnership.
Accordingly, no gain or loss is expected to be recognized by the Legacy Offshore Vehicles (as contributing partnerships) or by their respective partners (including the Limited Partners) upon the contribution of the portfolio assets to the Consolidated Master Fund LP. The contributed assets will take a carryover basis under Section 723 of the Code (i.e., the Consolidated Master Fund's basis in each contributed asset will equal the contributing vehicle's adjusted tax basis in such asset immediately prior to the contribution), and the holding periods of the contributed assets will tack under Section 1223(2) of the Code.
B. Investment Company Exception (IRC § 721(b))
Section 721(b) of the Code provides an exception to the general nonrecognition rule of Section 721(a) in the case of contributions to a partnership that would be treated as an "investment company" within the meaning of Section 351 of the Code if it were incorporated. The Consolidated Master Fund LP is not expected to constitute an "investment company" for purposes of Section 721(b) because its portfolio will consist primarily of operating company interests in digital infrastructure businesses (data centers, fiber-optic networks, edge computing facilities) and enterprise SaaS platforms. These portfolio company interests are not "stocks, securities, or other investment assets" of the type that would cause the Consolidated Master Fund to be characterized as an investment company. This conclusion is supported by the fact that each of the portfolio companies held by the Legacy Offshore Vehicles is an operating business in which the Funds exercise significant management control.
C. IRC § 367 Inapplicability
Sections 367(a) and 367(b) of the Code impose gain recognition or other adverse tax consequences on certain transfers of property to or from foreign corporations. Because the Consolidated Master Fund LP will be classified as a partnership (and not as a corporation) for U.S. federal income tax purposes, and because the Legacy Offshore Vehicles are themselves classified as partnerships, Sections 367(a) and 367(b) are not expected to apply to the contributions described in Steps 2 through 4. The contributions involve transfers by foreign partnerships to a domestic partnership, and the Section 367 rules are limited in their application to transfers involving corporations.
D. Nonrecognition on Distributions (IRC § 731)
The distributions by the Legacy Offshore Vehicles of their respective interests in the Consolidated Master Fund LP to their existing Limited Partners in Step 5 are intended to qualify as tax-free distributions under Section 731(a) of the Code. Under Section 731(a)(1), gain is not recognized by a partner upon a distribution by a partnership except to the extent that any money distributed exceeds the adjusted basis of the partner's interest in the partnership immediately before the distribution. Because the Step 5 distributions will consist of interests in the Consolidated Master Fund LP (i.e., property other than money), and not distributions of cash, no gain recognition is expected.
Section 731(c) of the Code provides a special rule that treats distributions of "marketable securities" by a partnership as distributions of money for purposes of Section 731(a). The interests in the Consolidated Master Fund LP are not expected to constitute "marketable securities" as defined in Section 731(c)(2) of the Code, because such interests will not be actively traded on an established securities market or readily tradable on a secondary market (or the substantial equivalent thereof). Accordingly, Section 731(c) is not expected to apply.
E. Liability Shifting (IRC § 752)
The Consolidated Master Fund LP will assume approximately $1.34 billion in aggregate liabilities from the Legacy Offshore Vehicles in connection with the contributions of portfolio assets. The assumption of these liabilities will result in shifts in partner-level liability shares, potentially triggering deemed contributions (under Section 752(a) of the Code) and deemed distributions (under Section 752(b) of the Code) among the partners of the Legacy Offshore Vehicles and the Consolidated Master Fund.
Under the netting rules of Treasury Regulations § 1.752-1(f), increases and decreases in a partner's share of partnership liabilities that result from a single transaction are netted for purposes of determining whether the partner is treated as having made a deemed contribution or received a deemed distribution. After application of these netting rules, the deemed contributions and distributions resulting from the liability shifts in connection with the Reorganization are not expected to trigger gain recognition under Section 731 of the Code.
F. Built-In Gain Carryover (IRC § 704(c))
The $1.72 billion in aggregate built-in gain currently tracked under Section 704(c) of the Code by the Legacy Offshore Vehicles will carry over to the Consolidated Master Fund LP. Section 704(c) requires that, upon the contribution of property with a built-in gain (or loss) to a partnership, the partnership allocate items of income, gain, loss, and deduction with respect to such property so as to take into account the difference between the property's fair market value and adjusted tax basis at the time of contribution.
The Consolidated Master Fund LP will continue to use the remedial allocation method described in Treasury Regulations § 1.704-3(d) with respect to all contributed assets, consistent with the method currently employed by the Legacy Offshore Vehicles. The remedial allocation method provides the greatest protection against distortions arising from the "ceiling rule" applicable to Section 704(c) allocations.
G. Withholding (IRC § 1446)
No withholding under Section 1446(a) of the Code is expected to be required on the contributions of portfolio assets to the Consolidated Master Fund LP or on the distributions by the Legacy Offshore Vehicles to their Limited Partners, for two principal reasons: (a) the contributions are nonrecognition transactions that do not give rise to effectively connected taxable income ("ECTI"), and (b) the distributions in Step 5 are not amounts subject to withholding under Treasury Regulations §§ 1.1446-1 through 1.1446-6 because they do not constitute ECTI allocable to foreign partners. This analysis will be confirmed in the private letter ruling request described in Section VII.
H. FIRPTA / IRC § 897 Considerations
Calderwood & Harkness has undertaken a detailed analysis of whether certain portfolio company interests—particularly interests in NovaBright Data Systems Inc. (data centers), Thorngate Fiber Networks LP (fiber-optic networks), and Veridian Edge Computing Corp. (edge computing infrastructure)—constitute "United States real property interests" ("USRPIs") within the meaning of Section 897 of the Code and the Foreign Investment in Real Property Tax Act of 1980 ("FIRPTA"). The implications for non-U.S. investors of holding USRPI interests through the Consolidated Master Fund (via the International Feeder) have been evaluated, and appropriate structuring and withholding mechanisms will be implemented in the Consolidated Master Fund's partnership agreement to address FIRPTA compliance. Non-U.S. investors are encouraged to consult their own tax advisors regarding the potential application of FIRPTA to their specific circumstances.
I. Important LP Disclaimer
The foregoing is a summary of the anticipated U.S. federal income tax treatment of the Reorganization only and is not intended as, and should not be relied upon as, tax advice to any individual Limited Partner. Each Limited Partner is urged to consult its own tax advisors regarding the specific tax consequences of the Reorganization in light of its own particular circumstances, including any applicable state, local, or non-U.S. tax consequences.
The tax treatment described in this Section VI is based on current law and the advice of Calderwood & Harkness LLP, and is subject to (i) receipt of a favorable private letter ruling from the Internal Revenue Service, which Solara is in the process of requesting as described in Section VII below, and (ii) the absence of any change in applicable law, regulations, or IRS administrative positions prior to the completion of the Reorganization.
VII. PRIVATE LETTER RULING REQUEST
Solara, through its tax counsel Calderwood & Harkness LLP, is preparing and intends to submit a private letter ruling request (the "PLR Request") to the Internal Revenue Service. The PLR Request will be directed to the IRS's Office of the Associate Chief Counsel (International) ("CC:INTL"), with secondary subject-matter jurisdiction in the Office of the Associate Chief Counsel (Passthroughs & Special Industries) ("CC:PSI").
The target date for submission of the PLR Request is August 15, 2025. In advance of the submission, a pre-submission conference with IRS CC:INTL Branch 1 has been requested for July 22, 2025, in accordance with Revenue Procedure 2025-1, Section 10.07. The purpose of the pre-submission conference is to discuss the proposed transaction structure, identify any potential issues that the IRS may wish to raise in connection with the ruling request, and confirm the appropriate scope and format of the submission.
The PLR Request seeks the following eight specific rulings:
1. The contributions of portfolio assets by the Legacy Offshore Vehicles to the Consolidated Master Fund LP in Steps 2 through 4 qualify as tax-free contributions under Section 721(a) of the Code.
2. The Consolidated Master Fund LP does not constitute an "investment company" within the meaning of Section 721(b) of the Code, and accordingly the exception to nonrecognition under Section 721(b) does not apply.
3. Sections 367(a) and 367(b) of the Code do not apply to the partnership-to-partnership contributions described in Steps 2 through 4.
4. The distributions of Master Fund LP interests by the Legacy Offshore Vehicles to their respective Limited Partners in Step 5 qualify as tax-free distributions under Section 731(a) of the Code.
5. Section 731(c) of the Code (relating to distributions of marketable securities) does not apply to the distributions in Step 5 because the Master Fund LP interests do not constitute "marketable securities" as defined in Section 731(c)(2).
6. The shifts in partner-level liability shares resulting from the assumption of approximately $1.34 billion in liabilities by the Consolidated Master Fund LP, after application of the netting rules under Treasury Regulations § 1.752-1(f), do not result in gain recognition under Section 731 of the Code.
7. The Section 704(c) built-in gain accounts maintained by the Legacy Offshore Vehicles carry over to the Consolidated Master Fund LP, and the Consolidated Master Fund LP is permitted to continue using the remedial allocation method under Treasury Regulations § 1.704-3(d) with respect to all contributed assets.
8. Each of the newly formed entities—Solara Consolidated Master Fund GP LLC, Solara Consolidated Master Fund LP, Solara International Feeder (Cayman) LP, and Solara Tax-Exempt Feeder (Cayman) LP—is properly classified as a partnership (or, in the case of a single-member entity, as a disregarded entity) for U.S. federal income tax purposes under Treasury Regulations § 301.7701-3.
In addition to the foregoing eight rulings, the PLR Request will seek a supplemental ruling confirming that no withholding under Section 1446 of the Code is required in connection with the contributions or distributions effected as part of the Reorganization.
The IRS user fee applicable to the PLR Request is $38,000, which will be paid by the General Partner and treated as an organizational expense of the Consolidated Master Fund.
It is anticipated that the Reorganization will not proceed to completion unless either (a) a favorable private letter ruling is obtained from the IRS confirming the tax-free treatment of the Reorganization, or (b) Solara's tax counsel, Calderwood & Harkness LLP, determines, based on subsequently issued IRS guidance, published rulings, or other authoritative developments, that the ruling is no longer necessary to provide a sufficient level of comfort regarding the anticipated tax treatment.
VIII. IMPACT ON LIMITED PARTNERS
A. U.S. Taxable Investors
U.S. taxable investors who invest through Fund IV LP and Fund V LP—such as Argyle Family Office Holdings LLC and other domestic taxable limited partners—are not expected to be directly affected by the Reorganization. Fund IV LP and Fund V LP are not being contributed into the Consolidated Master Fund, and U.S. taxable investors will continue to hold their interests in Fund IV LP and Fund V LP on the same terms as currently in effect. Fund IV LP and Fund V LP will continue to co-invest alongside the Consolidated Master Fund in accordance with the existing parallel investment arrangements, and the economic terms of such co-investment will not be altered by the Reorganization.
U.S. taxable investors should note, however, that the Draft Amendments to the Fund IV LPA and Fund V LPA (described in Section X) include certain conforming amendments to reflect the restructured platform, and U.S. taxable investors are accordingly being asked to consent to such amendments as described in the enclosed Form of LP Consent.
B. U.S. Tax-Exempt Investors
U.S. tax-exempt investors currently invested through the Cayman parallel vehicles—such as Pinnacle State Employees' Retirement System and Grandview University Endowment—will transition from their current positions in Fund IV-A Cayman and/or Fund V-A Cayman to Solara Tax-Exempt Feeder (Cayman) LP as part of the Reorganization.
The Tax-Exempt Feeder is specifically designed to continue providing the UBTI blocker benefits that these investors currently receive through the existing Cayman parallel vehicle structures. Appropriate corporate blocker entities will be interposed between the Tax-Exempt Feeder and certain underlying portfolio company investments that generate income that would otherwise constitute UBTI, consistent with the existing approach. No gain recognition is expected on the transition from the Legacy Offshore Vehicles to the Tax-Exempt Feeder.
U.S. tax-exempt investors are encouraged to consult their own tax advisors to confirm that the Tax-Exempt Feeder structure will continue to meet their specific UBTI mitigation requirements.
C. Non-U.S. Investors
Non-U.S. investors currently invested through the Cayman and Luxembourg parallel vehicles—such as Nordhaven Sovereign Wealth Fund and Kestrel Pacific Insurance Group—will transition from their current positions in Fund IV-A Cayman, Fund IV-B Lux, Fund V-A Cayman, and/or Fund V-B Lux to Solara International Feeder (Cayman) LP as part of the Reorganization.
Withholding tax and treaty implications of the transition have been analyzed by Calderwood & Harkness in consultation with Solara's Cayman Islands counsel (Meridian Offshore Legal) and Luxembourg counsel (Veldhuis & Gérard S.à r.l.). No withholding tax is expected to be imposed on the transition transactions. Non-U.S. investors may wish to independently analyze the impact of the transition on their access to benefits under applicable income tax treaties, particularly investors that currently invest through the Luxembourg SCSp vehicles in reliance on Luxembourg treaty access.
Nordhaven Sovereign Wealth Fund has independently retained Bramhall & Quelwick LLP for the purpose of reviewing the Reorganization and its implications for non-U.S. sovereign investors. Other non-U.S. investors may wish to consult their own tax and legal advisors regarding the specific implications of the Reorganization.
D. No Change in Economic Rights
The Reorganization is not intended to change any Limited Partner's economic rights, capital account balance, unfunded commitment obligations, distribution entitlements, preferred return accruals, or governance rights under the applicable fund documents. Each Limited Partner's proportionate interest in the underlying portfolio companies will be preserved through the Reorganization, and the terms of the carried interest and management fee arrangements applicable to each Fund will remain unchanged. The General Partner has structured the Reorganization to be economically neutral to all Limited Partners.
IX. LP ADVISORY COMMITTEE REVIEW AND INDEPENDENT COUNSEL
The LP Advisory Committee of Funds IV and V has been actively involved in the review of the proposed Reorganization since the General Partner first raised the concept at the LPAC's Q4 2024 meeting. The LPAC was provided with a detailed briefing memorandum on the proposed Reorganization in advance of its meeting on April 22, 2025, at which time the LPAC members discussed the structure, rationale, tax implications, and potential risks of the Reorganization at length. At the conclusion of that meeting, preliminary consent of approximately 78% in interest was obtained from the LPAC members present.
To ensure that the interests of all Limited Partners are adequately protected, the LPAC has retained Whitfield, Carruthers & Doyle LLP as independent counsel to review the Reorganization on behalf of Limited Partners. The engagement is led by Diana Carruthers, Partner, whose contact information is as follows:
Diana Carruthers, Partner Whitfield, Carruthers & Doyle LLP 200 South Biscayne Boulevard, Suite 4000 Miami, FL 33131
Whitfield, Carruthers & Doyle has reviewed the proposed PLR Request (in its final circulated draft form), the five-step transaction structure, the governing documents for the newly formed entities, and the Draft Amendments to the Fund IV and Fund V LPAs. In the course of its review, WCD provided substantive comments on the PLR Request and the transaction structure, all of which have been addressed by Calderwood & Harkness to WCD's satisfaction.
Limited Partners are encouraged to contact Diana Carruthers directly with any questions or concerns regarding the LPAC's review of the Reorganization.
X. REQUIRED CONSENTS — LPA AMENDMENT PROVISIONS
The Reorganization requires the affirmative consent of the Limited Partners under the amendment provisions of each Fund's LPA (or equivalent governing document). The applicable consent thresholds are as follows:
Fund IV LP and Fund V LP: Consent of Limited Partners holding a majority in interest (i.e., greater than 50%) of the aggregate capital commitments of all Limited Partners, as set forth in Section 13.2(a) of each Fund's LPA.
Fund IV-A Cayman and Fund V-A Cayman: Consent of Limited Partners holding not less than sixty-six and two-thirds percent (66⅔%) in interest of the aggregate capital commitments of all Limited Partners, as set forth in Section 14.1 of each Fund's Exempted Limited Partnership Agreement.
Fund IV-B Lux and Fund V-B Lux: Consent of the commanditaires (limited partners) holding not less than seventy-five percent (75%) of the aggregate commitments, as set forth in Article 22.2 of each SCSp's partnership agreement (contrat de société en commandite spéciale).
Each Limited Partner is requested to execute and return the enclosed Form of LP Consent. Consent is being sought for the following specific actions:
(a) The contribution of portfolio assets by the Legacy Offshore Vehicles to the Consolidated Master Fund LP, as described in Steps 2 through 4 of the Reorganization;
(b) The dissolution of the Legacy Offshore Vehicles and the distribution of Master Fund LP interests to Limited Partners, as described in Step 5 of the Reorganization;
(c) The migration of Limited Partners into the appropriate feeder vehicles (International Feeder or Tax-Exempt Feeder, as applicable), including the execution of subscription agreements and partnership agreements for the new feeder vehicles;
(d) The amendment of the existing Fund IV LPA and Fund V LPA to reflect the restructured platform and to authorize the General Partner to execute all necessary transaction documents, ancillary agreements, certificates, filings, and other instruments in connection with the Reorganization, in each case on behalf of the applicable Fund and its Limited Partners.
Copies of the Draft Amendment to the Fund IV LPA and the Draft Amendment to the Fund V LPA are available upon request from Priya Narasimhan, General Counsel, or Stefan Dalmqvist, Head of Tax, at the contact information set forth in Section XV below.
XI. LENDER AND THIRD-PARTY CONSENTS
In addition to LP consent, the Reorganization requires certain consents and notifications from lenders, service providers, and regulatory authorities, as summarized below.
Subscription Credit Facilities. Consent under the existing subscription credit facilities has been or will be requested from the applicable lenders:
Fund IV: $1.1 billion revolving credit facility with Ashford National Bank, N.A., as administrative agent and sole lender. The General Partner has initiated discussions with Ashford National Bank regarding the consent requirements under the credit agreement, and preliminary indications are that consent will be forthcoming subject to customary conditions.
Fund V: $1.5 billion revolving credit facility with Ashford National Bank, N.A. and Sentinel Capital Markets LLC, as administrative agent. The General Partner is coordinating with Sentinel Capital Markets regarding the consent process and anticipates that formal consent requests will be submitted promptly following receipt of LP consent.
Insurance. Insurance coverage under the directors' and officers' liability / errors and omissions policies with Hawkstone Specialty Insurance Co. (aggregate policy limit of $50 million) is being endorsed to cover the newly formed entities and their respective officers and directors. The General Partner's insurance broker has confirmed that endorsement of the existing policies is available without material additional premium.
Fund Administration. Clarendon Fund Services Ltd., which currently serves as the fund administrator for the offshore vehicles, is being notified regarding the transition of fund administration responsibilities in connection with the dissolution of the Legacy Offshore Vehicles and the establishment of the new feeder vehicles and the Consolidated Master Fund.
Cayman Islands Counsel. Meridian Offshore Legal (Fiona McAllister, Partner) has been engaged to handle the formation and registration of the new Cayman feeder vehicles with CIMA and the deregistration of the legacy Cayman vehicles (Fund IV-A Cayman and Fund V-A Cayman) following their dissolution.
Luxembourg Counsel. Veldhuis & Gérard S.à r.l. (Marc Gérard, Managing Partner) has been engaged to handle the dissolution and liquidation of the Luxembourg SCSp vehicles (Fund IV-B Lux and Fund V-B Lux), including all required notifications to the Commission de Surveillance du Secteur Financier ("CSSF") and filings with the Luxembourg Trade and Companies Register.
XII. TIMELINE
The following table sets forth the anticipated timeline for the Reorganization. All dates are target dates and are subject to change based on the receipt of LP and third-party consents, the IRS ruling process, and other factors.
The foregoing timeline is subject to (i) receipt of a favorable IRS private letter ruling confirming the anticipated tax treatment of the Reorganization (or a determination by Calderwood & Harkness LLP that such ruling is no longer necessary), (ii) receipt of all required LP consents under the applicable LPA provisions, and (iii) completion of all required lender and third-party consents and regulatory filings as described in Section XI. The General Partner reserves the right to adjust the timeline as circumstances require, and will promptly notify Limited Partners of any material changes.
XIII. CONSENT MECHANICS — INSTRUCTIONS TO LIMITED PARTNERS
Each Limited Partner is requested to review this letter carefully, together with the following enclosed documents: (i) the Form of LP Consent, (ii) the LP Tax Impact Summary Letter, (iii) the Pre-Reorganization Organizational Charts, and (iv) the Post-Reorganization Organizational Charts.
After completing its review, each Limited Partner should execute and return the enclosed Form of LP Consent by one of the following methods:
By mail or courier delivery:
Solara Digital Infrastructure GP LLC
Attn: Priya Narasimhan, General Counsel
1200 Market Street, Suite 3400 Wilmington, DE 19801
By encrypted electronic delivery:
Executed consents may also be delivered electronically via the secure portal at the web address that will be provided separately by Priya Narasimhan. All electronic submissions must be made in PDF format and must bear authorized signatures. For access credentials and technical support regarding encrypted electronic delivery, please contact Priya Narasimhan at the contact information set forth in Section XV.
Deadline for Return of Consents: All executed Forms of LP Consent must be received by Solara Digital Infrastructure GP LLC no later than 5:00 p.m. Eastern Time on ____, 2025, which is thirty (30) calendar days from the date of this solicitation letter (the "Consent Deadline").
Limited Partners who do not return an executed Form of LP Consent by the Consent Deadline will be deemed to have not consented to the Reorganization, in accordance with Section 13.2(c) of the Fund IV LPA and Section 13.2(c) of the Fund V LPA (and the corresponding provisions of the governing documents of each offshore vehicle). For the avoidance of doubt, the failure to return a consent shall not be treated as affirmative consent to the Reorganization under any of the applicable LPAs. Limited Partners are strongly encouraged to return their consents promptly to ensure that the requisite consent thresholds are met.
XIV. ENCLOSED DOCUMENTS
The following documents are enclosed with this letter for the Limited Partners' review:
1. Form of LP Consent — The formal consent instrument for execution and return by each Limited Partner. Each LP should execute and return the Form of LP Consent in accordance with the instructions set forth in Section XIII above.
2. LP Tax Impact Summary Letter — A plain-language summary of the anticipated U.S. federal income tax consequences of the Reorganization, prepared by Calderwood & Harkness LLP for the benefit of Limited Partners. This summary is intended to supplement, and not replace, the more detailed discussion of tax treatment contained in Section VI of this letter.
3. Pre-Reorganization Organizational Charts — Organizational charts depicting the current structure of the Solara fund platform, including all six existing fund vehicles and their relationships to the General Partner entities, offshore service providers, and portfolio companies.
4. Post-Reorganization Organizational Charts — Organizational charts depicting the target structure of the Solara fund platform following completion of the Reorganization, including the Consolidated Master Fund, the two Cayman feeder vehicles, and the continuing Delaware main funds.